Dr Richard Haass and professor Meghan O'Sullivan pictured at the Stormont hotel in Belfast after their Christmas break
Photograph:Stephen Hamilton/Presseye.com

Final hothouse political negotiations begin in Northern Ireland on Monday morning in a last-ditch bid to find agreement on contentious issues left over from the peace process.

Crunch early morning talks mediated by former US diplomat Dr Richard Haass are intended to reach accommodation on how to manage parades, flags and dealing with a violent past.

Dr Haass has said the five main parties are “extraordinarily close” to a resolution and cut short his Christmas break to return to Belfast on Saturday to kick-start one last round of discussions.

Dissident republicans opposed to the peace process have upped the ante recently in their attempts to kill members of the security forces and disrupt trade in the city.

Although the situation is unrecognisable from the days when conflict scarred the streets, politicians have been attempting to ease simmering sectarian resentment which recently exploded into violence over when the British flag flies and a decision to reroute a loyalist parade.

Divisions surround whether perpetrators of around 3,700 killings during Northern Ireland’s decades-long violent campaign waged by members of the IRA and loyalist paramilitaries should be prosecuted or whether limited immunity should be offered to encourage former gunmen to tell their victims’ relatives the truth.

While a deal is thought to be reasonably close on parades and dealing with the past - real progress has been made on the latter - flags has been more difficult to resolve.

A year ago traffic was blockaded and protesters clashed with police after Belfast City Council voted to restrict the number of days on which the Union flag flies from the city hall.

Dr Haass, president of the Council on Foreign Relations in New York and an envoy to Northern Ireland from 2001-2003, and talks vice-chairwoman Meghan O’Sullivan, a Harvard professor with experience in post-conflict Iraq, were asked in July by the ministerial executive at Stormont to submit recommendations for dealing with the region’s unresolved issues.

Dr Haass has warned the parties it is time to “fish or cut bait” and set a deadline for agreement for later on Monday.

On Saturday First Minister Peter Robinson said parts of the proposed agreement were “unworkable”.

Sinn Fein president Gerry Adams, whose party represents most nationalists, has said a deal can be done and appealed to talks participants to overcome their differences.

A Historical Enquiries Team of detectives was set up to investigate unsolved Troubles murders, but has run into controversy after an inspection accused it of treating security force killings differently from those by paramilitaries.

All parties agree that the views of victims should be integral to any process for dealing with the past, but it has been difficult to decide what that mechanism should be, whether limited immunity from prosecution should be offered to those who give information about shootings, bombings and other atrocities and what powers any new commission for investigating the past should have.

A replacement for the Government-appointed Parades Commission, which was heavily criticised by unionists after it rerouted a loyal order parade away from the nationalist Ardoyne part of North Belfast last summer following years of annual violence on July 12, is also thought to be under discussion.

The issue of where and when flags fly may be left to a separate process as parties have so far been unable to reach a common position.

Northern Ireland secretary Theresa Villiers urged all sides to show flexibility to make an agreement possible on divisive issues.

“From my many conversations on this over recent days, I am encouraged about the prospects for agreement, although some key issues are yet to be resolved, particularly on the past,” she said.

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